By Garrick Brown, Vice President, Research – West Region
On September 1st, DTZ and Cushman & Wakefield merged. The new Cushman & Wakefield draws on the best of both legacy organizations to create one of the world’s largest real estate services firms, with a combined total of $5 billion in revenue, 43,000 employees, more than 4.3 billion square feet under management, and $191 billion in transaction value. Cushman & Wakefield will be led by Chairman & Chief Executive Officer Brett White and Global President Tod Lickerman. Cushman & Wakefield is owned by an investor group composed of TPG, PAG, and OTPP.
What’s that mean for us in retail? Well, it means that our retail network of brokers has more than doubled in the United States alone. And that doesn’t even get into what it means for our ability now to do deals in Europe, Asia, South America, etc. with all of our new global colleagues throughout both legacy organizations. While the DTZ and Terranomics brands are being retired, we’re all still here and will be going forward under the Cushman banner. This move not only expands our reach and ability to assist clients with their real estate needs anywhere in the world, it also creates one of the largest and most dynamic retail practice groups in the world. The new Cushman & Wakefield retail team features some of the top suburban shopping center AND high street urban retail specialists in the world as well as an unparalleled capital markets team.
So welcome to the New Cushman & Wakefield Retail Newsline!
I’m writing to you today from beautiful San Diego on the opening day of the ICSC Western Division Conference and Deal Making event. This is one of the top three national ICSC events each year and always a great spot for not just doing deals but getting a feel for what is happening in the industry. I will be tweeting live from the Convention Center floor over the next couple of days. Today is golf day, special certification day and welcome reception day. The heavy lifting starts tomorrow. But I will be working the booth and roaming the floor dropping some interesting facts and tidbits as I go. If you want to follow me, check me out at Twitter—my handle is @retailwizard.
So we have an awful lot of news to catch up on in this expanded edition. Actually, there was so much news over the past two weeks that we are going to do expanded editions both this and next week simply to not overload everyone.
The big news of the past few days though is that consumer spending is up. All the stock market turbulence of the past five or six weeks didn’t mean much. Ironically, I still think it will take its toll on consumer confidence numbers for September when those are announced next week. What’s really interesting about the boost in consumer spending (+.4% in August and an upwardly revised +0.6% in July) is that not only are the numbers pretty robust but that they have been driven largely by two things; automobile sales and restaurant sales.
Now obviously this is not music to the ears of hard goods retailers. But it shouldn’t be viewed as bad news either. Do consumers who are nervous about the economy (and let’s face it, for the overwhelming majority of us that means our jobs) typically start spending more money eating out? Uh, no… that is usually one of the first things they cut. More importantly, do consumers who feel negative about the economy typically go out and make the large and usually relatively long-term commitment of buying new cars? Uh, no again. In fact, of all the categories where Americans could have boosted their spending over the past month the two that arguably have the greatest symbolic implications are where we have seen the biggest jump. Spiking automobile sales show Americans are less concerned about the longer term economic picture and feel secure in making a larger financial commitment. Increased restaurant spending shows that they are willing to pamper themselves more right here and right now.
But guess what? According to the Conference Board’s Consumer Confidence Index (CCI), American confidence in the economy stood at 101.5 in August. If Vegas took bets on it, I would not hesitate to put some serious money down on the proposition that the CCI Index drops when new numbers are released next week (BTW, speaking of degenerate gambling… I would make that same bet that the Fed isn’t going to do anything tomorrow).
It’s important to listen to what consumers say. But it’s more important to watch what they do. There is a relationship between consumer confidence and consumer spending but it is not as airtight as many think. Where the relationship appears strongest is after prolonged periods of up or down movement in confidence. That tends to be where we see the strongest correlations behind up or down movement in consumer spending. But even then it’s a loose relationship.
OK, you have enough reading to do this week. Next week I will be back with a super extended “Who is Doing What” section as well as more commentary.
During our hiatus of the last couple of weeks, my good friend Mike Palenchar of the MR Group released his monthly update of detailed same store comparables for the retail sector. He shares them with us each month and though these are a little late due to our break, I know many of you track these religiously. Here is the data for August and thanks again Mike!
By the way, there are a couple of people out there who track and disseminate same store sales data, but none that are so comprehensive in their coverage. Mike (email@example.com) also happens to be one of the top retail talent recruiters in the business. Mike has been active in the industry since 1999. His company specializes in identifying top talent for mid to upper level positions in the retail and building industries nationally. He’s helped a lot of people I know some great positions and he is a good friend to the Newsline. You can get on his mailing list for same store sales data by dropping him a line. He puts out a great monthly report that is free.
This post is commentary from the latest weekly edition of our Cushman & Wakefield Retail Newsline, which you can subscribe to for free by e-mailing firstname.lastname@example.org.
Garrick joined Cushman & Wakefield (formerly DTZ / Cassidy Turley) in October 2010. He serves as Vice President of Retail Research for the Americas. He speaks frequently at industry events and has been a keynote speaker at symposiums, conferences and market forecasting events for groups like the Appraisal Institute, Urban Land Institute, CREW, ICSC and PRSM. He is also a member of Lambda Alpha International, an invitation-only land use society for those who are involved in the ownership, management, regulation and conservation of land, but also those who are involved in its development, redevelopment and preservation.